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We’re excited to provide free access to 6 of the 37 (and growing) Theory of Constraints (TOC) finance and measures presentations ranging from an interview of Dr. Goldratt concerning the topic of performance measures. Dr. Goldratt discusses the goal and the concept of different identicals in addition to problems with measures. A workshop on the basics of TOC financial decision making is provided next. Third, an application of financial measures to the distribution function is presented to illustrate the use of measures. Fourth, the history, current status and directions for the future is discussed in addition to the problems of measures. Fifth, the dilemmas of performance measures are discussed and presented as evaporating clouds. Last, the situation where cash is the constraint and the concept and decisions that should be made to manage in this environment.

These presentations were selected to build your knowledge base of measures from simple to complex. The simple concepts of throughput accounting and the pitfalls of traditional managerial accounting are highlighted. In the annotated bibliography, several presentations are provided on the application of throughput accounting.

We have listed below the references and abstracts for the free presentations on this portal. In addition, we have provided a comprehensive annotated bibliography of ALL the performance measures presentations and webinar videos currently in our archives. And, at the end of this annotated bibliography is a TOC book list on measurements.

We recognize that all organizations whether for profit or for purpose or government are faced with a massive measurements problem. The organizations described in the TOC annotated bibliography of presentations have made significant improvement by using the TOC philosophy to continuously improve. TOC is the best methodology for today BUT there will always be a need for continuous improvement. These tools are part of the journey to excellent healthcare organizations.

Our hope is that you’ll learn from these 6 presentations and are moved to join TOCICO to gain access to the rest of our archives.

TOCICO membership includes:

FREE on-line access to all past TOCICO conference videos including the 29 additional finance & measures videos – there are several hundred videos starting with the second conference in 2004. These were previously sold for $149 per conference (totaling $1,788), but now, viewing ALL of them are INCLUDED with your membership.

Discounts on TOCICO products and conference attendance.

FREE access to the over 50 recorded webinars by some of your favorite TOC authors.

FREE registration to all new webinars – and just wait until you hear what’s in the works!

FREE pdf of the TOCICO Dictionary – 135 pages of pure content.

All 6 Strategy & Tactics trees by Eliyahu M. Goldratt

Over 20 Theory of Constraints articles with more on the way.

And, access to networking with the TOC community around the world on the TOCICO website. Build your page, start discussions, or contact another member – the new TOCICO website is web 2.0 ready and ready for you to engage.

This presentation is an interview by Alex Knight of Dr. Goldratt about measurement. How is a goal defined? How might we measure success towards moving to the goal? How might we define the goal and measures for a for-profit versus a for-purpose environment? Never ever put certainty on uncertainty. Story of Lamore Winter: What is your goal in life? Lamore: To make sure that people do not need illness. If you keep asking: What for? And you keep getting the higher objective you think it will go on indefinitely but you get to the different identicals. Here you are back in a circle each leading to another in the circle. In some cases it is three identicals in some cases it is more. Here all there are identicals in achieving the goal. For-profit organizations, make money now and in the future; provide satisfaction to customers now and in the future and provide satisfaction and security for employees now and in the future. Many things in life cannot be quantified. In this set of identicals there is one maybe two that cannot be quantified. What is quantified takes precedence over non-quantified identicals. People are using measurements instead of thinking. People prefer quantitative over qualitative and uncertainty is involved in decision making therefore probabilities must be associated with outcomes.

The workshop was presented by Rocco Surace. The Finance and Measures (FM) Basics Workshop is intended to be an introduction to this topic in which a person can become TOCICO certified. FM is about utilizing the appropriate measurements for making effective managerial decisions.

This presentation discusses three questions: If we implement the TOC distribution solution on a retailer, what will be the impact on its profit?; Can I use current retailer/distributor numbers in throughput accounting and make decisions without errors?; Which factors impact the financial results more in a distribution environment?. The discussion centers around the financial statements and throughput, inventory and operation expenses, a reexamination of T, I, OE; the truth about T; where is my I; OE is really OE; the financial impact of TOC distribution and modeling the impact. Financial accounting statements are described as they relate to T, I, and OE. A model illustrating the impact of shortages over time is provided.

LeTourneau (LT) is headquartered in Longview, Texas with manufacturing locations in Longview, and Houston TX and Vicksburg, MS and with dealer locations worldwide. Markets served include controls, drive systems, inter-modal mining, drilling, forestry, marine, and steel. LT characteristics include: 1. Product leadership makes the largest products in the world. Jack-up rig sells from 150 million to 300 million dollars. It is delivered as a kit valued at about 40 million then is built with about a million man-hours as a 1 to 3 year project. 2. Make steel from scrap making thick plates 2-10 inches. 3. Build front-end loaders 7000-75000 parts works 8 years with over 90% up-time. 4. Have produced most of these products for over 50 years. We have only been in the drilling market for five year. We are heavily vertically integrated which is unusual for heavy equipment manufacturers. Typical UDEs include long lead times, high WIP, high obsolete inventory, very low inventory turns, low on-time delivery, high overtime and expediting, exiting markets due to pricing competition, poor cash flow, and low ROI. Total reliance was placed on GAAP for decision making for product pricing, transfer pricing, sourcing, capital expenditure, product profitability, etc. In 2000 we implemented drum buffer rope (DBR), installed MAPICS finite capacity planning module causing on-time delivery to increase from 10 to 75%. In 2004, Constraint Management Group (CMG) worked with LT providing the Jonah program. In 2005 we implemented TOC company-wide. The core conflict was A Maximize LeTourneau ROI with B Meet LeTourneau’s customer and market requirements and opportunities requiring D Focus and act on company performance and the other requirements C Maximize margins and metrics under my control requiring D’ Focus and act on local performance. The primary injection was simple correct signals between business groups (BGs) and resources that maximize company throughput, net profit and ROI. The planning and control dilemma existed also. One strategic point was selected for each BG and component group. When we turned on the buffers we found we were working on green items (early items) when we had a lot of items in red (almost late). Steel Group implementation results showed previously poor financial performance to extremely profitable and included productivity increased 25%, WIP inventory decreased 25%, cycle time decreased 64% (14 to 5 weeks), on-time delivery increased from 50 to 90%, and plate inventory held decreased 2.6 million dollars.

This presentation will show how the 5 focusing steps can be used to solve the long standing local vs. global measurement dilemma. Key learning points include: 1.The measurement dilemma: the role played by variability; 2.We do not need new frameworks or classifications to define good measurements; 3. Robust subordination logic and buffer management are the key. Benefits to attendees include: 1. Accelerate the rate of improving system performance; 2. Instead of fighting measurements, use measurements to induce change; 3. Overcome a key obstacle to sustaining TOC implementations.

This presentation describes a method for constraint identification (questions to be asked about the market, production facility, and the suppliers), defines cash constraint, describes issues with cash constraints, discusses how to manage a cash constraint and provides a case study illustrating the concepts. A cash constraint exists only if there are sufficient orders, excess manufacturing capacity on all equipment, and suppliers are refusing to supply unless paid up-front. Definitions, measures and supporting throughput calculations are provided for cash to cash cycle, throughput, survival time, etc. Issues related to having a cash constraint, common mistakes, measurements, etc. are described and a simple example illustrates supporting concepts and measures.

Our hope is that you will learn from these six presentations and are moved to join TOCICO to gain access to the rest of our archives.

TOCICO membership includes:

FREE on-line access to all past TOCICO conference videos including the 29 additional finance & measures videos – there are several hundred videos starting with the second conference in 2004. These were previously sold for $149 per conference (totaling $1,788), but now, viewing ALL of them are INCLUDED with your membership.

Discounts on TOCICO products and conference attendance.

FREE access to the over 50 recorded webinars by some of your favorite TOC authors.

FREE registration to all new webinars – and just wait until you hear what’s in the works!

FREE pdf of the TOCICO Dictionary – 135 pages of pure content.

All 6 Strategy & Tactics trees by Eliyahu M. Goldratt

Over 20 Theory of Constraints articles with more on the way.

And, access to networking with the TOC community around the world on the TOCICO website. Build your page, start discussions, or contact another member – the new TOCICO website is web 2.0 ready and ready for you to engage.